Harbour jewel on the cheap

Good deal . . . Rushcutters Bay marina, home to the yachts of Sydney's rich. Photo: Robert Pearce

Rental for the Rushcutters Bay marina is a bargain, courtesy of taxpayers, writes Gerard Ryle.

When Macquarie Leisure Trust bought Rushcutters Bay marina for almost $12 million from the d'Albora group in 1999 it was buying into a good deal from the taxpayers of NSW.

The marina, home to the yachts of Sydney's elite, is built entirely on public land leased for 40 years, until 2015.

The land is managed by the Lands Department, which uses a rental formula that pretends it is just an empty paddock rather than one of the most valuable pieces of real estate in Sydney.

Macquarie Leisure Trust therefore pays $80,000 a year.

And the deal gets better. The land is valued at $3.72 million, according to Woollahra Council. Under normal circumstances it should attract a minimum land tax of $58,903.

But in this case the tax does not apply. The Office of State Revenue confirmed that land tax is not charged on fixed-term Crown leases that predate 1987.

The NSW Treasurer, Michael Egan, told State Parliament this week that a review of rentals and lease payments on Crown land was under way.

His comments came after a series of reports by the Herald on Crown leasehold land in NSW. "It will be a matter that the Treasurer and the Minister for Lands will have some very animated conversations about over the next few months," Mr Egan said.

There is a second lease on the Rushcutters Bay site - for the water-based portion of the marina. This, too, tells a tale.

Water leases in NSW are administered by the Waterways Authority, which uses a formula different to that of the the Lands Department. It requires Macquarie to pay a percentage of gross berthing turnover as well as a flat fee for the use of the water.

The total rent for the water was about $120,000 last year.

The percentage formula becomes more significant when one considers that marinas have become big money spinners in NSW, mainly thanks to the Premier, Bob Carr.

Two years ago he ordered a crackdown on new marina development, citing "a real danger that the beautiful coves and harbours around Sydney could be filled with structures".

In the case of the Rushcutters Bay site, taxpayers have in effect lost it forever.

Although the lease is due to run out in 2015, the Government would have to spend millions if it wanted it back because all the improvements remain the lease owner's when the lease runs out.

"We do not go selling off marinas," said Graham Harding, general manager of Crown lands in NSW.

"There are some parts of the Crown estate we do not trade in, particularly foreshore areas, because even though they are commercial infrastructure they are also public infrastructure. The general public often moves in and out of marinas."

The chief executive of Macquarie Leisure Trust, Greg Shaw, said the Rushcutters Bay deal was consistent with other Crown leases around Australia.

"I don't see how there is any issue there. Effectively what we are paying rent on is raw land; there are no improvements, no nothing. When you look at the commercial rent that you would pay for land with no improvements, it might seem like not a lot of money.

"But when you actually look at it as a return, it is actually quite competitive."